The College was $8 million away from
financial equilibrium four years ago. Since then, it has continued to
meet or exceed the goals set in the Plan for 2003 for fiscal
strength.
While the College's operating budget of nearly $69 million for the next fiscal year represents a 6 percent increase over the current budget, Mount Holyoke's financial strength continues to grow as it meets or exceeds the fiscal goals set out in the Plan for 2003, a comprehensive College planning document issued in 1997.
The board of trustees approved the College's budget earlier this month and reviewed Mount Holyoke's progress over the past four years. In that time, according to a report prepared by treasurer Mary Jo Maydew, the College has continued to make gains along a number of fronts. However, while Maydew noted that the College has moved millions of dollars closer to financial equilibrium since 1997, she also cautioned that Mount Holyoke continues to face significant financial challenges for the next few years.
On the plus side, for
example, although the Plan for 2003 originally projected a
half-million-dollar deficit for next fiscal year, FY '01, the College
has been able to bring its budget into balance. At the same time,
Mount Holyoke continues to spend less of its endowment annually for
its yearly operating expenses. In FY '01, the College plans to spend
only 5.4 percent of its endowment value, down from 5.6 percent this
year. The endowment itself, less affected in recent years by annual
expenditures, and supported by the current Campaign for Mount Holyoke
College, was valued at
$433.3 million as of March 31, 2000.
The College has also seen substantial increases in annual revenues over the past four years and expects to see an 8.8 percent increase in revenue for this coming fiscal year. Crucial to attaining budgetary equilibrium has been the College's success in dropping financial aid expenditures from 55 percent of tuition revenue in 1997 to 48 percent in this year's budget. Net student revenues have also increased an average of 8.5 percent per year over the past four years.
The College defines financial equilibrium by these factors: a balanced budget; appropriate funding of reserves; no use of unrestricted bequests for operations; and spending against endowment at a rate of no more than 5 percent of endowment value.
Mount Holyoke has been able to use its increasing fiscal strength to support a number of key areas. This year's budget contains an 8 percent increase in the salary pool for faculty and a 4.5 percent salary pool increase for staff. While the goal is the same--to provide competitive salaries--this has been much harder to achieve for faculty. The College has also been able to increase reinvestment levels in academic support, maintain support for the new centers established by the plan, and meet 85 percent of the requests for financial assistance by students for study abroad, up from 33 percent just three years ago.
Despite positive indicators, Maydew remains cautious, noting, "While we have made significant progress in improving the College's financial position, important challenges remain." The need for technological upgrades and renovation of facilities continues to exert significant pressure on the College. And, despite the current low rate of inflation, the College continues to face challenges that increasing costs and salary levels are posing throughout higher education.
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